Creating Opportunity in Atlantic Canada
Back in 2014, I had the pleasure of writing about Anaconda Mining, a small company out of Toronto with a lot of clout. Environmentally and community friendly, this mainly gold mining company has grand plans for expansion. The acquisition of Orex is furthering the Goldboro project in Nova Scotia, the gold mine at Point Rousse in Newfoundland is active, and there are a host of ancillary endeavours. We spoke with its President and Chief Executive Officer Dustin Angelo.
In May of 2017, Anaconda purchased Orex Exploration, which had the Goldboro project in Nova Scotia. Anaconda now oversees the development of the high-grade gold deposit that has roughly 870,000 ounces.
“All of 2017, we started the development process and continue with that. We hit a major milestone in January and announced the preliminary economic assessment, which we are pretty pleased about,” says Dustin.
The preliminary economic assessment demonstrated a net present value (NPV) of about $120 million (all figures Canadian), on a seven percent discount rate. It is about a 38 percent internal rate of return (IRR) and the payback period was just under three years. The mine life is nearly nine years.
The operating economics are very good as well. The cash operating cost per ounce is about $650.00 and the all-in sustaining cash costs are just under $800. The goal for Anaconda is to become a mid-sized company. It has been producing at a modest level for several years, and Goldboro is its first sizable acquisition, helping Anaconda to become a larger producer.
“Once Goldboro gets into production, we are looking to be in the range of about 50,000 to 60,000 ounces per year of gold production. It may still be on the smaller side, but it is a huge step for us,” says Dustin.
Goldboro brings with it a higher market profile for Anaconda and gives more credibility to do transactions to acquire further projects. In building the production profile, Anaconda is getting the word out about what it is capable.
Anaconda’s success is due in part to ongoing efforts to give back to the community and conversations with Indigenous groups. “We have a philosophy that we look at the interests of all stakeholders, not just shareholders, and we think that has long-term benefits to our company and to the surrounding area and to our shareholders,” says Dustin.
Since we last talked over four years ago, Anaconda has done a lot in giving to the local community, such as an annual contribution to the regional swim program in the Baie Verte area of Newfoundland and Labrador. It has also supported the regional hockey rink and a variety of other charitable organizations and events. A few years back it gave a $50,000 donation to Hope Air, a charity that assists with medical travel and a service that people from the area have used.
In the beginning, when Anaconda was a turnaround project, the community, its employees, vendors and the government were all involved and helped during tough times. “We feel like we are a part of the community and need to act as a responsible member, so we do that by giving back, providing employment and being environmentally responsible,” says Dustin.
Anaconda is in the process of drilling at the Goldboro site. The 7,000-metre drill program started in October of 2017 and is going very well. The goal is to demonstrate the ability to expand the known deposit area and do some infill drilling to shore up its mine planning with the preliminary economic assessment (PEA). The testing of the core samples are in line with expectations and, in certain cases, exceeding them.
The mining company has been working for the past eight years at Point Rousse in Newfoundland. Recently, it has been able to demonstrate that there are more mineral resources around the site and approximately four and a half kilometres from the operating mill. One such discovery is called Argyle. In January, it put out the first mineral resource estimate on Argyle that estimated about 70,000 ounces of indicated and inferred resources.
“It’s ‘open pittable,’ as we like to say, and the grade is just over two grams per tonne, which is about a third higher that what it is currently being mined at the Pine Cove pit. We are excited about it because it will add life to the local production,” says Dustin.
The deposit itself is still open in all directions, and Anaconda is performing exploration drilling there as well. It is seeing the ability to expand the deposit area. It has just finished a twelve-hole test drilling program and has announced all of the assay results.
Anaconda is innovative in repurposing its mine waste and rock tailings. Over the last two years, Anaconda sold mine waste from open pit mining operations as a construction aggregate product to a project down in South Carolina. This involved about three million tonnes of waste rock that was in waste dumps and in the ground.
“We did this project with our contract miner who bought a crushing spread, crushed and made the product. A shipping company called Phoenix Bulk Carriers helped ship it to South Carolina,” says Dustin. Then the contract miner created a company called Shoreline Aggregates, and the three entities were part of this venture over sixteen months.
“We shipped about three million tonnes, and it was a fantastic opportunity for us because we were able to generate some revenue off it, and at the same time, lower operational costs, mining costs and more importantly, reduce our environmental footprint,” says Dustin.
Anaconda is on the water and has built a dock facility for this venture that can accommodate 60,000-tonne Panamax vessels. The deep-water port allows Anaconda to ship large quantities. This, along with the current Canadian dollar, has made it feasible to ship rock a far distance.
There are more opportunities along the eastern seaboard, down into the Caribbean and the Gulf of Mexico. Anaconda has two to four million more tonnes of waste rock, and its partners are looking for more contracts. If successful, this new resource can be shipped, generating revenue.
“It’s not often that you see mining companies do this because the right ingredients are needed. Be close to water and cheap transportation being the most obvious. This is out-of-the-box thinking and not traditional mining,” says Dustin. The company tries to separate itself from the typical junior mining company, and it is just a part of its culture to be innovative and resourceful.
Anaconda also has a plan for its tailings created from the processing facility. It has about two million tonnes of finely ground tailings and has been working with the College of the North Atlantic to experiment to see if it might serve as a fertilizer enhancer. The lab tests have been positive so far, and there is a potential to sell it to the open market. This is a huge benefit for Anaconda because it will be able to generate revenue from the tailings.
The company’s narrow vein mining research and development project is being conducted with Memorial University of Newfoundland in St. John’s, with funding coming from the Atlantic Canada Opportunities Agency, the Research and Development Corporation (RDC) and the Industrial Research Assistance Program (IRAP).
“It has a $3.5 million budget, and the aim is to create a technology to more efficiently and economically mine underground single narrow vein deposits. These deposits are not economically viable using traditional methods,” says Dustin.
This could be a huge advantage for Anaconda as it has a current deposit that cannot be extracted using traditional means. It is only about one kilometre from the mill, and the new technology would enable the company to get at the resource and process the deposit. This would open further opportunities for Anaconda, and it would own the intellectual property, making for the potential to license the technology.
Memorial University of Newfoundland is working on creating the prototype, and in the spring of 2019, it will be field tested on the deposit that sits on the Anaconda site.
“There are a lot of exciting things happening at once, and it’s great because we have the standard gold mining – which is our core business – and all of the other ancillary businesses, ideas and projects that really help drive additional profitability,” says Dustin.
Although a small company that has mined a modest amount of gold to date, Anaconda has found ways to wring every dollar out of its natural resources. Mining on a small scale is challenging to a company, and remaining profitable is even more so. In finding new means to deal with that challenge, it will be better off.
By the end of 2018, Anaconda foresees production at the Rousse site climbing by fifteen percent to 18,000 ounces. It is moving into a new deposit area that has a higher grade product. It will continue drilling and exploration at the Argyle deposit at Point Rousse, and there are also some exciting plans for Goldboro where it is trying to get into production by 2021. Anaconda will embark on a 10,000-tonne bulk sample and bring that ore back to the Pine Cove Mill, before processing it and performing continued drilling.
“We are moving from the preliminary economic phase into most likely a feasibility phase. We want to do more infill drilling to increase the confidence level of the deposit for the area that will be included in the feasibility study,” says Dustin. Anaconda will begin the study mid-2018, and there are a lot of big plans in the wings. It will continue with community engagement and the permitting process to keep its timeline on track.